Change in Accounting Principle: Inventories

Effective January 1, 2014, the Company elected to change its method of accounting for certain inventories from lower of cost, as determined by the LIFO method, or market, to lower of cost, as determined by the average cost method, or market. Had the Company not made this change in accounting method, "Net income" for the three and six months ended June 30, 2014, would have been $1.5 million and $2.9 million, respectively, higher than reported in the Consolidated Statements of Income and "Inventories" at June 30, 2014, would have been $67.0 million lower than reported in the Consolidated Balance Sheets.

We applied this change in method of inventory costing retrospectively to all prior periods presented in accordance with U.S. generally accepted accounting principles relating to accounting changes. As a result of the retrospective change in accounting principle, opening retained earnings as of January 1, 2013, increased $38.8 million. Certain components of our financial statements affected by the change in valuation methodology as originally reported under the LIFO method and as adjusted for the change to the average cost method are as follows (in thousands, except per share data):



	Three Months Ended June 30, 2013									Six Months Ended June 30, 2013
Consolidated Statements of Income and Comprehensive Income	As Previously Reported (a)			Effect of Change			As Adjusted			As Previously Reported (a)			Effect of Change			As Adjusted
Cost of sales	$	(607,907	)	$	2,927		$	(604,980	)	$	(1,180,622	)	$	5,681		$	(1,174,941	)
Gross profit	192,323			2,927			195,250			374,815			5,681			380,496
Income from operations	107,270			2,927			110,197			210,516			5,681			216,197
Income before taxes	98,038			2,927			100,965			192,033			5,681			197,714
Provision for income taxes	(33,573		)	(1,140		)	(34,713		)	(66,955		)	(2,213		)	(69,168		)
Net income	64,465			1,787			66,252			125,078			3,468			128,546
Comprehensive income	80,435			1,787			82,222			143,806			3,468			147,274
Net income per common share:
Basic	0.67			0.02			0.69			1.30			0.03			1.33
Diluted	0.66			0.02			0.68			1.28			0.04			1.32

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(a)	Certain amounts in prior periods' consolidated financial statements have been reclassified to conform with the current period presentation.



	December 31, 2013
Consolidated Balance Sheet	As Previously Reported		Effect of Change			As Adjusted
Inventories	$	522,523	$	71,768		$	594,291
Deferred income tax assets	75,579		(27,963		)	47,616
Retained earnings	975,296		43,805			1,019,101



	Six Months Ended June 30, 2013
Consolidated Statement of Cash Flows	As Previously Reported			Effect of Change			As Adjusted
Net income	$	125,078		$	3,468		$	128,546
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax provision (benefit)	(8,999		)	2,213			(6,786		)
Change in inventories	5,759			(5,681		)	78

The components of inventories are as follows (dollars in thousands):



	June 30, 2014		December 31, 2013
Raw materials	$	239,393	$	212,027
Work in process	12,506		13,898
Finished goods	196,436		209,972
Supplies and materials	163,007		158,394
Inventories	$	611,342	$	594,291